In a match game:
There are two refs in the water, one along each side of the game arena. They wear snorkle gear and stay most on surface looking at game going on near them.
When they spot an iinfringment, they raise their arms to indicate to a third ref that the game needs to be stopped, while 'punishments' are awarded (equivalents of free-kicks etc).
This third referee is positioned up on the side of the pool out the water. when this ref spots the arm signals, a clanger bell is sounded which can be heard in the water. All the players stop and the game is reset and restarted and so it goes on.